Crossroads (Toward Philippine economic and social progress)
Philippine Star, 24 May 2017


Although some happenings in major capitals of the world might seem totally disconnected to us, they can affect our experience directly or indirectly.

In these developments, we are perfect bystanders. We have no influence on how the events unfold.

Washington DC in political turmoil. The new administration of Donald Trump as president of the United States has been in big political turbulence as it passed its first 100 days in office and moves on.

Even as he travels to the Middle East to advance diplomatic efforts for his country, at home he has suffered major setbacks in governing.

The wide media exposure of the FBI investigation of the suspected collusion of his election campaign with cyber interventions that have been tracked to Russian operations has done great damage to his credibility.

When he fired James Comey, the head of the FBI, who was central to the investigation, Trump suffered a backlash that led to the appointment of a “special counsel” to investigate the issue for the government.

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Armed with vast investigative powers, over whom Trump has no direct control, the work of the special counsel could be significant to his fate. The appointed counsel, Robert Mueller, who was a former FBI chief, is widely respected in Washington, considered fair, thorough, and competent.

Though still considered a remote possibility, any finding of wrong-doing could prematurely shorten the Trump presidency. The sudden fall of Richard Nixon in the Watergate scandal in 1972 is a painful historical reminder.

The turmoil of the Trump presidency is due to his relative political inexperience, a case of self-confidence gone wild. His confrontational style of running his domestic program of government through executive orders and the rush decisions that accompanied them has instead produced major setbacks.

Surprisingly, the setbacks to his domestic program might have resulted in the softening of policy stance concerning trade issues. He has ceased tough talk against countries that he had blamed for the loss of manufacturing jobs in the US.

Ongoing trade relations are a different matter. He has not undermined the WTO (World Trade Organization) through specific actions. He has only suggested tariffs as mechanisms to combat specific bilateral inequities, often mainly as trial balloons for action.

As for the TPP (TransPacific Partnership) with Asian and Pacific nations – Japan, South Korea, Vietnam, Brunei, Malaysia and Singapore, Australia, New Zealand on the Pacific side and Canada, Mexico, Chile and Peru on the American continent – he simply dismissed this by executive order to prevent implementation since it still had to be organized.

But pushing for major changes or revoking the NAFTA (North American Free Trade Agreement) with Canada and Mexico would require a prolonged process of negotiations involving these parties, which have been discussed.

The relationship with China (the country with which Trump’s original rants had been loudest) has appeared to grow from cool to warm and cooperative. The meeting of both Trump and the Chinese leader, Xi Jinping, at Mar-a-Lago, Florida, might have done the trick.

Thus, it appears that the volatile climate for international trade under Trump might not happen after all.

Beijing advances the old new silk road of the Eurasian mainland. One of the major projects that has become prominent recently is the plan of China to build the major road infrastructure criss-crossing the Eurasian mainland.

Though partly constructed over time through the efforts to coordinate the old “Asian highway” project, Beijing’s plan is more ambitious and well-focused.

The project is part of the major restructuring of China’s internal development program. In its early growth, reliance has been largely on exports to the industrial countries.

Having achieved rapid economic expansion over several decades that made it a major supplier of goods to the developed world, China has been realigning its economic strategy. Its engine of progress has to come from its own economic needs. Developing new sources of growth would be part of this realignment.

The opening of the vast trade routes over land in the massive Asian continent would eventually lead to China, even as these trade routes connect to new markets along the Asian and European directions.

China calls this new silk road the Belt and Road Initiative. The networks of roads in the China mainland lead toward China’s hinterland on to its major cities. The road encompasses the long Trans-Asia routes as well as new roads and transport networks connecting to the Southeast Asian mainland, further opening trade routes for Myanmar, Thailand and other Southeast Asian countries.

A complementary maritime silk road project is also being conceived to raise the development links to nations separated by maritime routes. This project is less fully developed but it will eventually include countries such as the Philippines.

China’s financial resources are being directed to assist the process.

The new AIIB (Asian Infrastructure Investment Bank), which is capitalized at $100 billion, represents a new financial resource that is committed toward the finance of major infrastructure projects in the areas of the silk road.

In addition, China has pledged a development fund in the amount of $40 billion toward the finance of business projects that are undertaken in in the region.

France’s new leader and the European Union. The French recently elected a young leader, Emmanuel Macron, who is sympathetic to the idea of a united Europe. Domestically, he seeks to introduce reforms to strengthen France’s economic position within the bloc.

The Brexit vote of a year ago strengthened skepticism about a united Europe. For a while, it was thought the Brexit vote in England would weaken Europe’s political tightness.

Recent elections have confirmed the political sympathy in favor of the European Union project. Macron’s election is the strongest proof of this from a major country in Europe. Earlier electoral outcomes in Austria and in the Netherlands have weakened the Euro-skeptics. Moreover, the foremost European leader, German chancellor Angela Merkel is running for a new mandate, and her party has met with recent local successes.

For now, therefore, the idea that the large European Union could break up is far from the prospects.

A strong EU also affects the prospects of the British negotiation of the Brexit terms. How EU negotiates with the British government on Brexit will tweak the economic interests of countries that trade heavily with Europe. The Philippines is one such country.